Operations and supply chain

management
 Supply chain

• Networks of manufacturers and service providers that work together to move

goods from the raw material stage through to the end user
• Linked through physical, information, and monetary flows

Organizations must carefully manage their operations and supply chains to prosper, and
indeed, survive!

Supply chain management

• A set of approaches used to efficiently integrate Suppliers, Manufacturers,

Warehouses, Distribution centers so that the product is produced and distributed
in the right quantities, to the right locations, and at the right time and system-wide
costs are minimized and service level requirements are satisfied
• Active management of supply chain activities and relationships to maximize
customer value and achieve a sustainable competitive advantage

History of Supply Chain Management

• 1960’s - Inventory Management Focus, Cost Control

• 1970’s - MRP & BOM - Operations Planning
• 1980’s - MRPII, JIT - Materials Management, Logistics
• 1990’s - SCM - ERP - “Integrated” Purchasing, Financials, Manufacturing, Order
Entry
• 2000’s - Optimized “Value Network” with Real-Time Decision Support;
Synchronized & Collaborative Extended Network

Operation management
The planning, scheduling, and control of the activities that transform inputs into finished
goods and services.

Operation Function
The collection of people, technology, and systems within a company that has primary
responsibility for providing the organization’s products and/or services.

Transformation
Process
Manufacturing operations
Inputs Output
Material Service Operations tangible goods
People fulfilling request
Equipment information
Intangible need satisfied customer
Information

Important trends interlinking operations and supply chain management

• Electronic commerce
– Reduces the costs and time associated with supply chain relationships
– The use of IT solutions to automate business transactions.
– Improve the cost of communications.

• Increasing competition and globalization

– Customers are demanding quicker delivery and product and services
suited to their individual need.
– Changes in markets, product, and technology is continuous
– Manager must make decision on shorter notice with less information.

• Relationship management
– Competition between chains, not individual firms
– Trust and coordination
– Informal interaction and information sharing

Cross-functional and inter organizational linkage in Operation and SCM

In every organization the activities of supply chain management requires inputs and
feedback of other functions from other department . It cant take place in a vacuum.
Activities in Purpose Interfunctional Interorganizational
operation and participants participants
SCM
Process Selection Design and Engineering, Customer
Implement the Mtkng, fin., HR, IT
processes
Forecasting Planning no. needed Mktng, fin, Supplier , Customer
accounting
Capacity Planning Establish capacity Mktng, fin, Supplier ,Customer
level accounting, hr
Inventory Manage the amount IT, fin, Supplier , Customer
management & placement of
inventory
Planning & control Schedule & manage Mktng , IT Supplier, Customer
the flow of work,
match customer
demand,
Purchasing Identify and qualify Engineering, Supplier
suppliers, manage Mtkng, fin
buyer supplier
relation
Logistics Movement of Engineering, Supplier, Customer
physical goods Mtkng,

Like in Process selection, engineering and information tech personnel help identify and
develop the technologies needed, while HR personnel identify the people skills and
training program. Marketing personnel and customer will assure that the process meets
the customer’s need.
 Operations and supply chain strategies

Strategy
Strategy are the mechanism by which businesses coordinate their decisions regarding
their structural and infrastructural elements. It can be thought of as long term game plans.

• Vision statements used to express organization’s values and aspirations.

• Mission statements express organization’s purpose or reason for existence

• Business Strategy- Long-term master plan for the company; establishes the
general direction.
Clearly identify firm’s target customer and set performance objectives

• Functional Strategies-Further develop the business strategy in segments of the

business — must be aligned and coordinated

• Core Competencies-Organizational strengths that provide focus and foundation

for the company’s strategies
Operation and supply chain strategy

A functional strategy that indicates how structural and infrastructural elements within the
operations and supply chain areas will be acquired and develop to support the overall
business strategy.
Primary objectives are:
1. to help management choose the right mix of structural and infrastructural
elements
2. to ensure that the firm’s structural and infrastructural choices are strategically
aligned with the firm’s business strategy
3. to support the development of core competencies in the firm’s operations and
supply chains

Operation and supply chain decisions

Structural infrastructural
Capacity organization
Facilities sourcing decision
Technology planning and control
Quality management
Product and service development

Fore performance dimensions

Quality
Time
Flexibility
Cost

• Quality (performance, conformance, reliability)

• Time (delivery speed and reliability, development speed)
• Flexibility (mix, changeover, volume)
• Cost (labor, material, engineering, quality-related)